State-owned UCO Bank is expected to announce the payment mechanism in the next 10 days, the report said.

New Delhi: India will import crude oil from Iran using a rupee-based payment mechanism, an industry source involved in discussions told news agency Reuters on Thursday, adding that 50 per cent of those payments will be used for exporting items to Tehran.

State-owned UCO Bank is expected to announce the payment mechanism in the next 10 days, the source said.

"An agreement had been signed by the Indian and Iranian government on November 2, 2018 for oil payment in rupees and 50 per cent of those funds had been earmarked for exports," according to an Indian government document reviewed by Reuters.

Oil payments are being made in rupees only as against earlier arrangements where there was a ratio of 45 per cent rupees and 55 per cent euros, the document said.